Saturday, December 13, 2014

Elizabeth Warren takes the fight to the Money Power

Great speeches that combine solid substance, clear explanation, rhetorical power, and political passion have become rare in American politics. Elizabeth Warren's speech on the Senate floor on Friday, December 12 was an exception. It's not very long, and it's worth listening to it carefully and in full (below).

The immediate target of this speech was an especially outrageous provision slipped into the 1600-page Omnibus Spending Bill at the last moment, without public discussion, that would repeal Dodd-Frank's prohibition on banks using federally insured deposit funds to gamble on certain types of particularly risky derivatives. (Not surprisingly, this provision was actually written by CitiGroup lobbyists.) But Warren used this specific scandal as a starting-point to develop a much more comprehensive argument that deserves wide and serious attention.

[Once again] we're watching as Congress passes yet another provision that was written by lobbyists for the biggest recipient of bailout money in the history of this country. And its attached to a bill that needs to pass or else we entire federal government will grind to a halt.

Think about that kind of power. If a financial institution has become so big and so powerful that it can hold the entire country hostage. That alone is reason enough to break them up.

Enough is enough.

Enough is enough with Wall Street insiders getting key position after key position and the kind of cronyism that we have seen in the executive branch. Enough is enough with Citigroup passing 11th-hour deregulatory provisions that nobody takes ownership over but everybody will come to regret. Enough is enough.

Washington already works really well for the billionaires and the big corporations and the lawyers and the lobbyists. But what about the families who lost their homes or their jobs or their retirement savings the last time Citigroup bet big on derivatives and lost? What about the families who are living paycheck to paycheck and saw their tax dollars go to bail out Citi just 6 years ago?

We were sent here to fight for those families. It is time, it is past time, for Washington to start working for them! [....]

Warren's speech included an obligatory reference to Teddy Roosevelt, and her invocation of TR was on-target. Back during the Gilded Age of the late 19th and early 20th centuries, it was not uncommon for prominent public figures to denounce the corruption of political as well as economic life by concentrated economic power and the misdeeds of what Roosevelt called "malefactors of great wealth".

A century ago Teddy Roosevelt was America's Trust-Buster. He went after the giant trusts and monopolies in this country, and a lot of people talk about how those trusts deserved to be broken up because they had too much economic power. But Teddy Roosevelt said we should break them up because they had too much political power. Teddy Roosevelt said break them up because all that concentrated power threatens the very foundations up our democratic system.

But during the New Gilded Age we have been living through over the past several decades, and even since the financial crisis and economic crash of 2008 that the forces of concentrated economic power and numerous malefactors of great wealth played big roles in bringing about, they have gotten away almost scot-free. Not completely, perhaps, but to a remarkable and infuriating degree.(And not only have the plutocrats been systematically coddled and largely shielded from public criticism, but whenever they do receive any mild criticisms, they and their propagandists whine that they're being vilified and persecuted by dangerous extremists. The whole situation would be ludicrous if its consequences weren't so harmful.)

In this speech, Warren takes them on clearly and directly, and part of what makes her message here vivid and effective is that she gives these forces a paradigmatic (corporate) embodiment, CitiGroup—while making it clear that the problem is a lot bigger than just CitiGroup. She also doesn't hesitate to emphasize that the corruption of our politics by the influence of Big Money reaches deeply into both major parties, not just the Republicans.

One further note. Even people who are generally sympathetic to Warren's position (as we all should be!) may not necessarily agree with one of her key conclusions: It's not enough to try to regulate the most dangerous activities of the big banks and other financial institutions, they need to be broken up.

You know, there is a lot of talk lately about how Dodd-Frank isn't perfect. There is a lot of talk coming from CitiGroup about how Dodd-Frank isn't perfect. So let me say this to anyone listening at Citi — I agree with you. Dodd-Frank isn't perfect. It should have broken you into pieces! If this Congress is going to open up Dodd-Frank in the months ahead then let's open it up to get tougher, not to create more bailout opportunities. If we're going to open up Dodd-Frank, let's open it up so that once and for all we end too big to fail and I mean really end it, not just say that we did.

But whether or not you agree, the arguments leading up to that conclusion have to be taken seriously. Perennial debates between those who want to emphasize breaking up oligopolies and "trusts" and those who want to emphasize regulating them in the public interest go back to the Progressive era and the New Deal. In this case, Warren is suggesting that the financial behemoths commonly described as "too big to fail" are also too big, and too politically powerful, to regulate effectively—not least because they will use their political power to sabotage, distort, and eventually dismantle even half-serious efforts at financial regulation. That's a prolonged and complicated process, largely carried out behind the scenes. But this particular scandal may have helped to bring it out into the open.

—Jeff Weintraub

[Addendum, 12/14: For some further explanation of what the fight over the CitiGroup-written provision was about, see Paul Krugman's column on "Wall Street's Revenge: Dodd-Frank Damaged in Budget Bill". Beyond the intrinsic significance of that specific provision, this also has to be understood as one battle, or skirmish, in a long-term political struggle.]

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About Me

Jeff Weintraub is a social & political theorist, political sociologist, and democratic socialist who has been teaching most recently at the University of Pennsylvania, Bryn Mawr College, and the New School for Social Research.. He was a Visiting Scholar at the Center for European Studies at Harvard University in 2015-2016 and is currently a Research Associate at the Graduate School of Social Work and Social Research, Bryn Mawr College.
(Also an Affiliated Professor with the University of Haifa in Israel & an opponent of academic blacklists.)